Quite often, particularly on newer developments, a management company exists to deal with the upkeep of parts of the development which are regarded as communal to all home owners eg. shared grass land, private roadways, lighting and insurance of the shared amenities.
All home owners are expected to make an annual contribution towards the management company expenses. This does of course vary depending on the level of work required each year.
In addition, the Land Registry entries for each property may include a Restriction requiring the management company’s consent to any changes of either ownership or creation of a new mortgage. Their consent is likely to be needed for any sale, transfer or remortgage of the property.
The requirements of each management company vary but normally require Notice to be served on the management company giving full details of the transaction so they can update their records. An administration fee is payable to the management company which can range from £50 to £200 or more.
In addition, when selling a property, the buyer’s solicitor will need a “management pack” to be provided. The pack will include copies of accounts for recent years (so the buyer can ascertain the approximate annual fee); details of any large future expenditure (so the buyer is aware of any imminent increases of the annual fee); and confirm whether the buyer needs to enter into a separate Deed of Covenant with the management company to confirm their awareness of the obligations on their part (eg. to notify the management company of any wants of repair to the communal parts) and to covenant to pay future expenses.
The “management pack” is issued by the management company and again the fees vary considerably, often in the region of £350. This cost is the responsibility of the person selling the property and will need to be paid at the outset of the transaction.
The buyer of the property will be responsible for the administration fee referred to above in respect of the Notice giving details of the transaction. There may be further fees payable by the buyer where the management company makes an extra charge for providing Land Registry consent and for preparation of a Deed of Covenant. These fees also vary, but again can be in the region of £350.
This is an area under review as there is currently no regulatory body to ensure the fees charged are reasonable. Certainly, in some cases, the fees do seem excessive for the amount of work actually involved. Hopefully there will soon be regulations in place to avoid unreasonable and excessive costs to both buyers and sellers alike.
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